Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms? / Jonathan E. Haskel, Sonia C. Pereira, Matthew J. Slaughter.

Format:

Book

Author/Creator:

Haskel, Jonathan E.

Contributor:

National Bureau of Economic Research.

Pereira, Sonia C.

Slaughter, Matthew J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w8724.

NBER working paper series no. w8724

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2002.

Summary:

Are there productivity spillovers from FDI to domestic firms, and, if so, how much should host countries be willing to pay to attract FDI? To examine these questions we use a plant-level panel covering U.K. manufacturing from 1973 through 1992. Across a wide range of specifications, we estimate a significantly positive correlation between a domestic plant's TFP and the foreign-affiliate share of activity in that plant's industry. This is consistent with positive FDI spillovers. We do not generally find significant effects on plant TFP of the foreign-affiliate share of activity in that plant's region. Typical estimates suggest that a 10 percentage-point increase in foreign presence in a U.K. industry raises the TFP of that industry's domestic plants by about 0.5 percent. We also use these estimates to calculate the per-job value of these spillovers. These calculated values appear to be less than per-job incentives governments have granted in recent high-profile cases, in some cases several times less.

Notes:

Print version record

January 2002.